Audit finds overpayment for child care

A recent state audit found an estimated $2.6 million in overpayments to child care providers in a program that helps low-income parents with young children keep their jobs and move off the welfare system.

An estimated $2 million in overpayments went to one provider.

Spokesmen for the two agencies that oversee the Working Connections Child Care program say they are already taking steps to reduce chances of fraud through the subsidy program. Repayments also are being sought for $426,000 of the verified overpayments.

Longer term, the Department of Early Learning and the Department of Social and Health Services want changes in law to let them demand records from the more than 19,600 providers the state pays for child care services. The agencies also want an electronic attendance system that makes it easier to keep records of when a child is actually in the system.

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“The agencies, both DSHS and DEL, are indicating they do not have the statutory authority to require records,” Democratic state Rep. Ruth Kagi of Lake Forest Park said Monday. “If that is in fact the case, we will absolutely pass a bill to rectify that. I’m sure the governor will request it.’’

Kagi chairs the House Early Learning and Human Services Committee and said the agencies sought an electronic “swipe card” system earlier this year to improve accountability and record keeping. “But it costs money and we don’t have it,’’ Kagi said.

Rep. Maureen Walsh, the Walla Walla Republican who is the ranking minority member of Kagi’s committee, also hopes to see legislative action that cuts down on mishandling of funds. Walsh said she does not think fraud is rampant in the child care program but believes it is very hard to have accountability. Walsh also believes that any “swipe card” system could be abused the way electronic benefit transaction cards, or EBTs, are sometimes abused in the welfare system.

Advocates believe subsidized child care is a key piece to moving welfare-dependent families to the work force, because child care costs can bite a big hole in a single parent’s earnings.

The audit was spurred by past state audits, problems in other states’ programs, a legislative audit completed in 2010, and a federal General Accounting Office review of Washington’s program that showed inadequate controls over finances.

The state auditor’s review looked at a relatively small part of the program – examining three months of activity for just 146 of the 19,684 child providers that were paid in fiscal year 2010. In some cases, payments were made for ineligible children, were issued for holidays or were duplicates.

Auditors questioned the legitimacy of $241,000 in other payments. They also said six providers never kept records, 4,823 enrollees in the program had provider billing numbers, and that some Social Security numbers used by a recipient were invalid or belonged to a deceased person.

But a lion’s share of the alleged overpayments – $2 million – was for a single provider who refused to provide records, claiming they were stolen. Auditors then extrapolated the possible overpayments over a seven-year period for that one case, ballooning the estimated overpayments overall.

Working Connections spent $306 million to serve 33,500 families, including 60,000 children in 2010, and lawmakers this year tightened eligibility requirements.

The audit also found 3,295 families were on a waiting list for child care subsidies in the period examined.